Bank Indonesia Introduces Remuneration for Excess Reserves

Enhancing Liquidity Management

Bank Indonesia has announced a new policy to provide remuneration for banks' excess reserves held with the central bank. The remuneration rate will be set at 25 basis points below the Deposit Facility rate, which currently stands at 3.50%. This means banks will receive interest on their excess liquidity parked with BI, encouraging more efficient management of surplus funds.

Context and Market Impact

The decision comes as the banking sector continues to maintain significant liquidity buffers with BI. As of Q3 2025, total bank placements at BI reached Rp 929.3 trillion, representing a substantial increase from Rp 784.63 trillion in the same period last year. BI Deputy Governor Juda Agung explained that this measure aims to prevent banks from solely relying on monetary operations instruments like the Bank Indonesia Rupiah Securitization (SRBI) for their excess liquidity.

Rationale and Future Implications

The SRBI instrument has seen growing participation from banks, with holdings reaching Rp 618.31 trillion by November 2025, marking a 2.76% year-over-year increase. By introducing remuneration for excess reserves, BI aims to create a more balanced liquidity management framework. This move is particularly relevant in the current environment where credit demand remains subdued, and banks are looking for optimal ways to manage their liquidity.